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LOS b: Explain and contrast prepayment tranching and credit tranching.
Q1. Prepayment tranching refers to:
A) subdividing a corporate bond so some components pay coupon and others pay principal.
B) subdividing an asset or mortgage backed security so some components are exposed to more prepayment risk than others.
C) subdividing a corporate bond so some components pay earlier coupon payments than others.
Q2. Prepayment tranching is also referred to as:
A) serial tranching.
B) time tranching.
C) credit tranching.
Q3. The most common form of credit enhancement for asset backed securities is:
A) credit tranching.
B) corporate guarantees.
C) cash reserve funding. | 
发表于 2009-3-26 09:55
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